Ex-SanDisk executive sentenced to probation for inside tips

NEW YORK (Reuters) - A former executive of SanDisk Corp SNDK.O was sentenced on Tuesday to a year of probation after admitting to supplying illegal tips to a hedge fund consultant.

Donald Barnetson, 39, pleaded guilty in February 2012 to a charge of conspiracy to commit wire fraud and securities fraud as part of a broad U.S. government crackdown on insider trading.

At a hearing in federal court in New York, U.S. District Judge Kimba Wood also ordered Barnetson to pay a $4,000 fine.

Barnetson was one of a number of defendants charged as part an insider trading investigation focused on expert networking firms, which connect high-end investors with industry experts.

Prosecutors said that Barnetson, a senior director at SanDisk, a maker of memory chips, had provided confidential information to a consultant who ran a research firm in Portland, Oregon.

The consultant, identified in court papers as John Kinnucan, obtained insider information about companies including SanDisk, F5 Networks Inc (FFIV.O) and Flextronics International(FLEX.O), the documents said.

Kinnucan then sold the information to clients of his firm, Broadband Research LLC, including hedge funds and money managers, prosecutors said.

Barnetson provided confidential information about SanDisk and Apple Inc (AAPL.O), one of the companies SanDisk supplied with electronic components.

Court documents said Barnetson told Kinnucan about SanDisk’s anticipated revenues in July 2010. Barnetson in September 2010 also told Kinnucan about negotiations to settle a legal dispute between SanDisk and Apple, the papers said.

In exchange, Barnetson received the consultant’s friendship, meals at high-end restaurants and confidential information about other technology companies, according to the charging documents.

Barnetson went on to cooperate in the investigation of Kinnucan, who garnered attention in 2010 by publicly refusing to cooperate with the federal government’s insider trading probe.

Kinnucan ultimately pleaded guilty last year and was sentenced in January to more than four years in prison.

Barnetson becomes the 50th person to be sentenced since federal prosecutors in New York began filing a major wave of insider trading case in October 2009.

To date, 81 people have been charged and 73 have been convicted.

Peter Leeming, a lawyer for Barnetson, did not immediately respond to a request for comment.

The case is U.S. v. Barnetson, U.S. District Court, Southern District of New York, No. 12-cr-00157.